Agriculture's Impact on Kentucky is Worth Billions

The importance of Kentucky agriculture extends well beyond the farm. The total economic impact of agriculture production, inputs, processing, and manufacturing is nearly $46.3 billion and represents 263,000 jobs in Kentucky, based on a recent analysis by the University of Kentucky College of Agriculture.

Kentucky is one of a growing number of southern states where an emerging agbioscience industry is proving to be a boon to their economies, according to a recent survey conducted by Battelle, the world’s largest independent research and development organization. Agbioscience encompasses a broad continuum of development, production, and value-added use of plants and animals for food, health, fuel, and industrial applications.

Historically, employment associated with Kentucky agriculture has been limited to production agriculture, said Alison Davis, PhD, agricultural economist and director for the college’s Community and Economic Development Initiative of Kentucky. This sector's value in Kentucky is $6.1 billion and includes cash receipts from commodities as well as revenues from additional sources of farm income, such as custom work, machinery hire, and farm rental values. Cash receipts totaled nearly $5 billion, including $2 billion in agricultural exports in 2011. The largest agricultural export originating from Kentucky is soybeans, followed by tobacco and corn.

It’s important, however, to recognize food and fiber processing and manufacturing that value-added enterprises represent beyond the farm gate.

“Ignoring these businesses underestimates the value of the agricultural sector,” Davis said.

Defining the Kentucky agriculture cluster to include these sectors adds 143,776 workers to the more than 90,000 individuals who work directly in agriculture production and $24 billion in direct revenues. This impact does not include service-based industries such as banking, insurance, or legal sectors. This number also does not include the nearly $10 billion impact of the forestry and wood products sector and the more than 51,000 jobs that support it, Davis noted.

The Battelle study, “Impact and Innovation: Agbioscience in the Southern United States,” determined that agriculture, forestry, and fisheries production generates $240 billion in economic activity within the southern region and supports more than 2.2 million jobs, with labor income totaling $62 billion.

Downstream processing of agriculture, forestry, and fisheries output into value-added food and industrial products adds an additional $1 trillion in output to the South’s economy, and almost 4.6 million jobs with labor income totaling more than $200 billion.

“In our science- and technology-based economic development practice at Battelle, we have observed the consistent rise of agbioscience as a core driver of economic growth and business expansion opportunities for the U.S.,” said Simon Tripp, co-author of the report. “This is an extremely dynamic sector, leveraging sustainable biobased resources to produce goods that meet large-scale market needs. The southern region is a global leader in traditional agricultural economic activity and can count itself as one of a select few regions in the world that is also leading the charge in emerging areas of the modern bioeconomy.”

The study’s findings show that agbioscience, its value-chain in production, and the downstream industrial activity are vital to the country’s sustainable global and domestic economic future, with the southern region helping drive that activity.

“The current and future importance of the agbiosciences is hard to overstate,” Tripp said. “For instance, this science and industry sector is fundamental to the survival of the world’s expanding population, the food security of our nation and the health of our population.”

Battelle conducted the report on behalf of the Southern Association of Agricultural Experiment Station Directors and the Association of Southern Regional Extension Directors.

Laura Skillman is the director of Agricultural Communications Services within UK’s College of Agriculture.

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